EPA with Japan to benefit Bangladesh’s RMG greatly: BGMEA

The signing of the economic partnership agreement (EPA) with Japan marks a historic milestone in Bangladesh’s trade diplomacy, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said today.

The EPA represents not only a trade arrangement but also the natural progression of a trusted and long-standing partnership, the BGMEA said in a statement.

The association said the trade body and the entire readymade garment family of Bangladesh remain deeply grateful to the government of Japan for its continued support in fostering sustainable economic growth and strengthening bilateral relations.

Japan has long been Bangladesh’s largest development partner, and as the country’s biggest provider of official development assistance, its contributions have been instrumental in supporting Bangladesh’s infrastructure development, industrial expansion, and overall economic transformation, the statement read.

As Bangladesh prepares for LDC graduation, securing stable and predictable market access through bilateral trade agreements has become an urgent national priority, the association said.

In this context, the Japan-Bangladesh EPA is both strategic and timely. From a trade perspective, the EPA is expected to significantly improve market access for Bangladesh’s exports, particularly ready-made garments, which dominate Bangladesh’s export basket to Japan.

In fiscal year 2024–25, Bangladesh exported $1.41 billion worth of garments to Japan, while Japan’s total global imports stood at approximately $23 billion.

Japan is the world’s second-largest garment-importing country after the United States when considered as a single market. Despite this scale, Japan currently accounts for only about 3 percent of Bangladesh’s total garment exports.

As Bangladesh aspires to reach $100 billion in garment exports by 2035, having the EPA in effect and increasing Japan’s share to at least 10 percent should be a clear strategic objective.

An initial assessment of the EPA shows that it favours Bangladesh’s readymade garment sector by ensuring uninterrupted duty-free market access and maintaining favourable rules of origin.

At present, Bangladesh enjoys duty-free access to Japan under the GSP scheme. However, post-LDC graduation, Bangladesh would otherwise face Japan’s general Most Favoured Nation (MFN) tariffs, which range from 8 to 15 percent for knitwear and from 10 percent to more than 15 percent for woven garments.

The BGMEA also said that under the EPA, customs duties on garment items will be eliminated entirely from the date of entry into force.

Furthermore, Bangladesh is deeply thankful to Japan for the extraordinary flexibility extended in the rules of origin, particularly for garment products, the association said.

Chapter 3 and Annex 2 of the agreement specify that garments produced under single-stage processing will qualify for duty-free access in Japan under the EPA. This is similar to the current Japan GSP rules of origin and is among the most favourable arrangements for a garment-exporting country like Bangladesh.

As the EPA creates a favourable and predictable trade environment, it is now imperative for Bangladesh to develop a clear roadmap to fully utilise its benefits and potential in line with the $100 billion garment export vision.

Bangladesh currently runs a trade deficit of approximately $456 million with Japan. The BGMEA believes the EPA will also play a significant role in reducing this gap. It presents an opportunity to diversify exports beyond garments while encouraging greater engagement from Japanese garment importers, retailers, machinery suppliers, and long-term investors.

The Japan-Bangladesh EPA should be seen as the beginning of a broader and much-needed shift in Bangladesh’s trade policy direction.

The EPA should serve as a guiding light for further such agreements that will be required in the post-LDC period, along with the challenges of EU GSP+.

Therefore, the EPA with Japan can be used as a negotiating guideline across other countries for the Ministry of Commerce and the government to fast-track negotiations and move forward without delay, since time has already lapsed in preparation.